Impact of Foreign Direct Investment and Trade on Economic Growth of India

This study analyzes the impact of foreign direct investment (FDI) and trade on the economic growth of India. It examines the positive effects of FDIs and favorable trade policies on the national economy. The study also explores the expansion of international trade and its contribution to economic growth. Recommendations are provided to attract more FDIs and enhance trade and commerce in India.

Running head: FOREIGN DIRECT INVESTMENT AND TRADE
A STUDY TO UNDERSTAND THE IMPACT OF FOREIGN DIRECT INVESTMENT
AND EXPANSION OF TRADE ON ECONOMIC GROWTH OF INDIA
Name of the Student:
Name of the University:
Author’s Note:

1FOREIGN DIRECT INVESTMENT AND TRADE
ABSTRACT
The aim of the research is to analyse the impact of the Foreign Direct Investments (FDIs) and
trade on the economic growth of the nation in the particular context of the nation of India.
The researcher for the conduct of this analysis had taken the help of the positivism research
philosophy, deductive research approach, descriptive research design, primary data collection
method and qualitative data analysis method. The researcher for the collection of the primary
data interviewed 4 Managers from Tata Consultancy Services, India and 4 Managers from
Flipkart, India. The results of the study reveal the fact that the different foreign direct
investments which India had been able to get in the recent years had positively affected the
national economy of the concerned nation. More importantly, the study also revealed the fact
that the favourable trade policies, business regulations, FDI norms and others followed by the
nation had enabled it to attract a large number of FDIs in the recent years which will enhance
the trade and commerce of the nation had also made a positive contribution towards the
economic growth of the nation. Furthermore, the researcher also found that the economic
growth facilitated by the expansion of international trade and also on the score of the FDIs
had percolated within all the sectors of India. Lastly, the researcher had proposed some
recommendations which will enable the Indian government to attract more FDIs like the
improvement of the image of the nation in the international business arena, expansion of
trade and commerce, formulation of trade policies and business regulations which would be
favourable for the international corporations willing to invest into the concerned nation and
others.

2FOREIGN DIRECT INVESTMENT AND TRADE
ACKNOWLEDGEMENT
I would firstly like to thank my Professor Mr. …………, for offering me the opportunity to
complete my dissertation on the topic “A Study to understand the impact of foreign direct
investment and expansion of trade on economic growth in India”. In addition to him, I would
also thank my Supervisor for the constant academic support which he provided and without
which I would not have been able to complete this dissertation.
Lastly, I would also thank my friends and family members for the constant support which
they have given me and without whom this study would not have seen the light of the day.
Thank You.
--------------------------------------
(Name of the Researcher)

3FOREIGN DIRECT INVESTMENT AND TRADE
Table of Contents
Chapter 1: INTRODUCTION....................................................................................................6
1.1 Introduction.................................................................................................................6
1.2 Background of the Study.............................................................................................6
1.3 Overview of Indian Economy..........................................................................................7
1.4 Foreign Direct Investment in India..................................................................................7
1.5 Rationale of the Study......................................................................................................8
1.6 Problem Statement...........................................................................................................8
1.7 Research Aim...................................................................................................................9
1.8 Research Objectives.........................................................................................................9
1.9 Research Questions..........................................................................................................9
1.10 Significance of the Study.............................................................................................10
1.11 Structure of the Study...................................................................................................10
1.12 Summary......................................................................................................................11
Chapter 2: LITERATURE REVIEW.......................................................................................12
2.1 Introduction....................................................................................................................12
2.2 Overview of the concept of economic growth...............................................................12
2.3 Factors affecting the economic growth of a nation........................................................13
2.3.1 Trade and Commerce..............................................................................................13
2.3.2 Foreign Direct Investment.......................................................................................14
2.3.3 Governmental Factors.............................................................................................14
2.3.4 Infrastructure of the nations....................................................................................15
2.4 Overview of the Trade sector and trade expansion........................................................15
2.5 Relationship between the trade sector and the economic growth of a nation................16
2.6 Overview of the concept of Foreign Direct Investment (FDI).......................................17
2.7 Factors affecting the process of FDI..............................................................................17
2.7.1 Trade Policies of the Host nations..........................................................................17

4FOREIGN DIRECT INVESTMENT AND TRADE
2.7.2 Business Rules and regulations...............................................................................18
2.7.3 Potential of the host business market......................................................................18
2.7.4 Economic condition of the host nation....................................................................19
2.8 Relationship between FDI and economic growth of a nation........................................19
2.9 Challenges related to FDIs.............................................................................................20
2.10 Summary......................................................................................................................20
Chapter 3: RESEARCH METHODOLOGY...........................................................................22
3.1 Introduction....................................................................................................................22
3.2 Research Philosophy......................................................................................................22
3.2.1 Justification for the Selected Research Philosophy................................................23
3.3 Research Design.............................................................................................................23
3.3.1 Justification for the Selected Research Design.......................................................23
3.4 Research Approach........................................................................................................24
3.4.1 Justification for the Selected Research Approach...................................................24
3.5 Data Collection Method.................................................................................................25
3.5.1 Justification for the Selected Data Collection Method...........................................25
3.6 Data Analysis Method....................................................................................................26
3.6.1 Justification for the Selected Data Analysis Method..............................................26
3.7 Ethical Considerations...................................................................................................26
3.8 Limitations of the Study.................................................................................................27
3.9 Summary........................................................................................................................27
Chapter 4: FINDINGS.............................................................................................................28
4.1 Interview Transcripts.....................................................................................................28
4.1.1 Interview 1..............................................................................................................28
4.1.2 Interview 2..............................................................................................................30
4.1.3 Interview 3..............................................................................................................31
4.1.4 Interview 4..............................................................................................................33

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4.1.5 Interview 5..............................................................................................................34
4.1.6 Interview 6..............................................................................................................36
4.1.7 Interview 7..............................................................................................................37
4.1.8 Interview 8..............................................................................................................38
Chapter 5: DISCUSSION........................................................................................................40
5.1 Introduction....................................................................................................................40
5.2 Discussion of the Findings.............................................................................................40
5.3 Summary........................................................................................................................45
Chapter 6: CONCLUSION AND RECOMMENDATIONS...................................................46
6.1 Conclusion......................................................................................................................46
6.2 Linking with Objectives.................................................................................................46
6.3 Recommendations..........................................................................................................48
6.4 Future Scope...................................................................................................................49
References................................................................................................................................51
APPENDIX: Interview Questions............................................................................................56

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Chapter 1: INTRODUCTION
1.1 Introduction
According to Vernon (2017), the extensive internationalisation or the unprecedented
usage of globalisation while improving international trade and commerce had made the
global economy a dynamic one. Furthermore, it is seen that the different multinational
corporations are increasing expanding the scope or the interests of their business in the
various emerging host nations of the world because of the benefits offered by the same
(Pradhan 2017). More importantly, the process of establishing business ventures in the host
emerging market by way of the usage of the process of foreign direct investments (FDIs) had
not only benefited the multinational corporations from the different nations but at the same
time had greatly facilitated the growth of trade in the host emerging nations as well(Nölke et
al. 2015). This had contributed towards the effective development of the national economies
of the majority of the emerging nations.
1.2 Background of the Study
The researcher opted for the analysis of the impact of FDIs and expansion of trade on the
national economy of India considering the importance that these two hold within the
economic framework of the developing or emerging nations. Presently, it had been seen that
the multinational corporations in a bid to explore the business markets of the emerging
nations are resorting to the usage of the process of FDI (Roy, Shah and Sharma 2017).
However, an interesting fact to note is that the process of FDIs not only helps the
multinational corporations to explore the business markets of the emerging nations or to
increase their profitability but at the same time offers various benefits to the host nations as
well (Paul and Mas 2016). The process of FDIs by way of facilitating the establishment of
different business ventures enhances the domestic as well as the international trade of the
nations and this in turn helps the concerned nations to attain the desired level of economic
growth (Pradhan and Singh 2017).
In the particular context of the nation of India, it is seen that the process of FDIs started in
1991-1992 as an initiative on the part of the national government of India to stabilise the
economy of the concerned nation. As per the report of Ibef.Org (2019), an important impact
of the FDIs on the Indian economy can be attributed to the fact that since the year 1991 the
concerned nation had been able to GDP of 5% and by the end of the year 2019 the nation is

7FOREIGN DIRECT INVESTMENT AND TRADE
trying to enhance it to around 7% so as to accelerate the economic growth of the concerned
nation. More importantly, for the attainment of this particular end, the nation had relaxed its
FDIs norms and by the end of the year 2019 it is trying to get more than “US$ 100 billion
worth of FDI inflows”. However, recent research clearly point out that the process of FDIs
not only increases the business competition or the rivalry in the business markets of majority
of the host nations but in the longer run also adversely affects the growth prospects of the
native business enterprises as well (Davis, Fuchs and Johnson 2019). Thus, the nations need
to be cautious regarding the extent to which they are using the process of FDIs and also the
kind of multinational corporations that they are allowing to conduct business in their markets.
1.3 Overview of Indian Economy
Indian economy, a developing mixed economy, is the 7th largest one of the world on
the basis of nominal GDP while being the 3rd largest one of the world on the score of
purchasing power parity (PPP) (Ft.com 2019). The national economy of the concerned
nations “ranks 139th in per capita GDP (nominal) with $2,134 and 122nd in per capita GDP
(PPP) with $7,783 as of 2018” (Ibef.org 2019). In addition to these, for the year 2018, the
national economy of India registered a growth rate of more than 6.9% and is expected to
grow even further in the subsequent years(Davis, Fuchs and Johnson 2019). Furthermore, the
presence of different business enterprises like Flipkart, Amazon, Reliance, Tata and others
had rendered the much needed stability to the national economy of the nation under
discussion here (Ft.com 2019). For example, by offering employment opportunities to the
citizens of India and also the tax money that they pay to the national government they have
contributed significantly towards the improvement of the Indian economy.In this regard, it
needs to be said that the constructs of FDIs and international trade are the two major entities
which had helped in the growth of the national economy of India.
1.4 Foreign Direct Investment in India
As discussed by Shahbaz et al. (2016), India in the recent times had become one of
the most favoured locations for FDIs on the score of the favourable trade or business policies
followed by its national government and also suitable business conditions. Furthermore, the
large amount of individual wealth help by the citizens of the nation and also its large
population had contributed significantly towards the same. As per the Department for
Promotion of Industry and Internal Trade (DPIIT), the FDIs investment that the nation of
India received for the year 2018-2019 was US$ 44.37 billion with US$ 9.16 billion being
invested in the service sector alone(Ibef.org 2019). In addition to this, the hardware and

8FOREIGN DIRECT INVESTMENT AND TRADE
computer industry of India received more than US$ 6.42 billion investment followed by the
retail sector which received US$ 4.46 billion worth of investment(Ft.com 2019). More
importantly, the maximum amount of investment was received from Singapore (US$ 16.23
billion), followed by Mauritius (US$ 8.08 billion), Netherlands (US$ 3.87 billion), USA
(US$ 3.14 billion), Japan (US$ 2.97 billion) and others(Ibef.org 2019). These FDIs have
positively affected the trade and commerce of the concerned nation and thereby helped in its
economic growth.
1.5 Rationale of the Study
The issue selected by the researcher is that the process of FDIs and international trade
while improving the national economy of India in the short-term basis is likely to adversely
impact its national economy in the longer run. Furthermore, the over-reliance of the Indian
business world and its citizens on the foreign brands is likely to eliminate the key Indian
business enterprises by enhancing the business competition in the Indian market (Picciotto
and Mayne 2016). This is an issue because if this particular trend continues then rather than
rejuvenating the Indian business the business ventures established through the process of
FDIs would eventually monopolise the same which in turn is likely to adversely affect its
national economy (Pradhan and Singh 2017). This has presently become an important issue
because the Indian national government in a bid to accelerate the pace its economic growth is
inviting different multinational corporations in the nation to establish their ventures in India
and also relaxed the FDI policies of the nation to facilitate the same (Roy, Shah and Sharma
2017). The researcher will thereby try to show that the nation of India had been able to attain
significant amount of economic growth through the usage of FDIs and international trade
through the usage of primary data collected from eight professionals related to the business
sector of India through the conduct of interviews.
1.6 Problem Statement
Roy, Shah and Sharma (2017) are of the viewpoint that the constructs of FDIs and
international trade are the two cornerstones of the economic growth of the nation of India.
The effective usage of these two constructs have helped in the rejuvenation of the national
economy of India and within a very short time had helped it to become one of the largest
mixed economies of the world as well (Pradhan 2017). However, the issue arises because the
mushrooming of business ventures of the multinational corporations in the concerned nation
had led to the deterioration of the native business enterprises of India over the years through
the intensification of business rivalry (Paul and Mas 2016). This is likely to adversely impact

9FOREIGN DIRECT INVESTMENT AND TRADE
the development rate or the growth rate of the national economy under discussion here in the
longer run.
1.7 Research Aim
The aim of the research is to analyse the impact of the Foreign Direct Investments
(FDIs) and trade on the economic growth of the nation in the particular context of the nation
of India.
1.8 Research Objectives
The primary research objective on which the entire study will focus on has been stated
below-
1. To analyse whether the economic growth of India has been affected over the years by
the dynamics in FDI and the trade sector of the country
In the light of the primary research objective mentioned above, the researcher had
formulated different secondary research objectives which are listed below-
I. To understand whether greater inflow of foreign direct investment is directly or
inversely related with the economic growth of the country
II. To analyse whether the expansion of international trade relations is directly or
inversely related with the economic prosperity of the country
III. To find out whether the economic growth (if any) due to inflow of FDI and trade
expansion percolated in developing all the sectors of the economy of the country
1.9 Research Questions
The primary research question on which the entire study will focus on has been stated
below-
1. How has the economic growth of India been affected over the years by the dynamics
in FDI and the trade sector of the country?
On the basis of the above-mentioned primary research question, the researcher during the
course of the study would also take into account different secondary research questions which
are listed below-
I. Is greater inflow of foreign direct investment directly or inversely related with the
economic growth of the country?

10FOREIGN DIRECT INVESTMENT AND TRADE
II. Is the expansion of the international trade relations directly or inversely related with
the economic prosperity of the country?
III. Has the economic growth (if any) due to the inflow of FDI and trade expansion
percolated in developing all the sectors of the economy of the country?
1.10 Significance of the Study
The research will be an important one since it intends to show the manner in which
the construct of FDIs help in the enhancement of the domestic and the international trade and
in turn lead to growth of the national economy of a nation. More importantly, the researcher
by using the case study of the nation of India is going to show the manner in which the
developing or the emerging nations can take the help of the constructs of FDIs and trade to
bring about the growth or the development of their national economy. However, the
researcher at the same time in a succinct manner intends to show the negative aspects of the
over-reliance on the process of FDIs as well. In the light of these aspects, it can be said that
the study will serve as a framework which can be utilised by the emerging or the developing
nations to improve their national economy.
1.11 Structure of the Study
The researcher for the completion of the study in conjunction with the stipulations of
conducting academic research work will follow the below given structure-
Figure 1: Structure of the Study

11FOREIGN DIRECT INVESTMENT AND TRADE
Source: (Created by the Author)
On the basis of the above given figure, the researcher has divided the entire study into
six chapters, namely, Introduction, Literature Review, Research Methodology, Findings,
Discussion and Conclusion and Recommendations. In “Chapter 2”, the researcher undertakes
a critical analysis of the selected topic and thereby highlights the important theoretical
concepts related to FDIs, trade and their impact on the national economy of a nation. In
“Chapter 3”, the researcher elucidates the methodological framework which has been used
for the completion of the research while highlighting the research design, approach, data
collection method, data analysis method and others. In “Chapter 4”, the research offers a
transcript of the interview which was conducted with eight Managers related to the
corporations, Tata Consultancy Services and Flipkart of the nation of India whereas in
“Chapter 5” the researcher discusses the findings derived from the same in the particular
context of the ideas discussed in the literature review section of the study. This had been done
by the researcher for the purpose of attaining the necessary coherence in the study and also
for the purpose of enhancing the quality of the study under discussion here. In the final
chapter, the researcher will summarise the major findings or ideas of the study. In addition to
this, the researcher in the final chapter of the study also offers some recommendations on the
basis of the results of the entire study while highlighting the future scope of the study.
1.12 Summary
To sum up, the researcher in the above discussion had outlined the research aim,
research objectives, research questions, problem statement and other facets of the study. This
chapter will be followed by the review of past literature, that is, the chapter “Literature
Review” wherein the researcher will outline the important theoretical concepts related to the
topic selected for the dissertation.

12FOREIGN DIRECT INVESTMENT AND TRADE
Chapter 2: LITERATURE REVIEW
2.1 Introduction
The researcher in this chapter will use the past literature related to the topics of
national economy, foreign direct investment, trade expansion and others for shedding more
light on the selected topic. More importantly, the researcher highlights the different important
theoretical frameworks, models, concepts and others related to the topic.This will help the
researcher to discuss the findings obtained from the interviews and thereby analyze the role
or the impact of FDIs in the case of the economic growth of India.
2.2 Overview of the concept of economic growth
Mahmoodi and Mahmoodi (2016) are of the viewpoint that the concept of economic
growth refers to the “inflation-adjusted market value” of the different commodities or the
services offered by a particular economy or a nation. On the other hand, Bowen (2019) has
stated that the term economic growth denotes the net increase in the amount or the volume of
the commodities or the services “produced per head of the population” in a stipulated time-
period. Adding to this, Hickson (2017) has noted that the entity of economic growth is
usually measured in terms of percentage and for the effective calculation of the same the
economies are required to compare their percentage of revenue that they have earned with the
ones of the preceding years. In other words, for effectively calculating the percentage growth
in the value of the national economy of a particular nation, the individuals are required to
take into account the “real gross domestic product” or for that matter the GDP of the
concerned nation (Farla, De Crombrugghe and Verspagen 2016). In this regard, it needs to
be said that the percentage increase in the national economy yields different insightful
information regarding the economy of a particular nation. Firstly, it denotes the value of the
national economy of the concerned nation and also the percentage of increase in the amount
of commodities or services which are being manufactured by the different business
corporations operating in the concerned nation (Khoshnevis, Salehi and Soheilzad 2017).
Secondly, the percentage of economic growth also reveals valuable information regarding the
inflation rate, the buying abilities of the citizens of the nation, a rough estimate of the
individual wealth held by the different citizens of the concerned nation and others (Iwasaki
and Suganuma 2015). Thus, it can be said that the entity of economic growth is directly
interlinked with the other aspects of a nation which affect the national economy of the

13FOREIGN DIRECT INVESTMENT AND TRADE
concerned nation. In the light of this, it can be said that the national government of the
different nations of the world while planning to undertake the development of their national
economies are required to take into account the diverse factors affecting their national
economy.
2.3 Factors affecting the economic growth of a nation
As discussed by Leamer and Stern (2017), the national economy of any nation is
dependent on a plethora of factors and all these factors influence the economic growth of any
nation regardless of the nature of the national economy of the concerned nation. Some of the
important factors which influence the economic growth of any nation are outlined below-
2.3.1 Trade and Commerce
According to Iamsiraroj (2016), an important factor which affects the national
economy of a particular is the extent to which trade and commerce is being conducted in the
concerned nation. In this context, the research work conducted by Iamsiraroj and Ulubaşoğlu
(2015) is important to note since it clearly indicates that the factor of trade and commerce is
important since they are not only the major source of commodities or services production in
the different nations of the world but also because of the high amount of revenue generated
by them from the central lacuna of the economic system of the entire nation itself. Thus, the
roles played by the different business enterprises which are operational in a particular nation
become important. Furthermore, Pradhan (2017) had found that the nations with abundant
number of business enterprises which are able to manufacture large volumes of goods and
services and thereby generate a large amount of revenue find it easier to attain a higher level
of economic growth in comparison to the nations which do not boasts of a large number of
fully-functional business enterprises. A common feature among the different first world
nations of the world with strong as well as stable national economies is that they boast of
large number of high-revenue generating business enterprises which in turn support the
growth of the national economy of the concerned nations (Alfaro 2016). In addition to these,
through the effective development or the growth of trade and commerce the nations also have
the opportunity to indulge in overseas trade and commerce which in turn is likely to further
boast their national economy. In the light of these aspects, it can be said that the factor of
trade and commerce is an important one which directly affect the national economy of any
nation by affecting the business activities of the enterprises based in the concerned nation
(Agrawal 2015).

14FOREIGN DIRECT INVESTMENT AND TRADE
2.3.2 Foreign Direct Investment
Danakol et al. (2017) are of the viewpoint that an important trend perceptible within
the modern-day business world is the different business corporations are increasingly
resorting to the method of internationalization or for that matter globalization for the
expansion of the scope of their business. As discussed by Kaushal and Pathak (2015),
globalization had transformed the entire world into a global village wherein it is seen that the
business enterprises from the different parts of the world regardless of the nation to which
they belong are able to indulge into trade relations and also establish their business ventures
into the other nations of the world. An important process which is being followed by the
business corporations for the process of entering into the business markets of the other host
nation is foreign direct investment (FDI) (Chan 2016).
As noted by Azam and Ahmed (2015), foreign direct investment (FDI) can be defined
as the mechanism or the process through which the different business corporations undertake
an investment into the existing enterprises of the host nations for the expansion of the
prospects or the scope of their business. On the other hand, the research of Amann and
Virmani (2015) reveals that the process of foreign direct investment helps the international
business enterprises to gain ownership over the business activities of the corporations
operational in the diverse host nations of the world. This is directly tied up with the economic
growth of the different nations of the world since it had been seen the business enterprises
into which FDIs are being made add value to the economic framework of the nations by way
of enhancing the product or service production and also through the growth in the national
revenue (Gui-Diby and Renard 2015). In addition to these, Sapkota and Bastola (2017) in this
study on FDI found that the business enterprises in which FDIs are being made offer
employment opportunities to the citizens of the host nations so as to manufacture a larger
volume of commodities or services and also for getting their tasks or projects completed. This
in turn contributes significantly to reduce the unemployment rate which also adds to the value
of the national economy of the nations. Thus, the FDIs are another important factor on which
the economic growth of any nation greatly depends (Sun 2018).
2.3.3 Governmental Factors
As discussed by Jones and Wren (2016), the government policies, initiatives,
measures and others also play an important role in the development or the growth of the
national economies of the different nations of the world. For example, it had been observed
that the business operations or the activities of the different business corporations which are

15FOREIGN DIRECT INVESTMENT AND TRADE
operational in a particular nation are being directly influenced by the policies, measures and
other aspects of the national government of the nations. The responsibility of the national
government of the nations to undertake different kinds of measures for promoting the growth
of trade and commerce so as to facilitate the growth of the business operations of the diverse
business enterprises which are operational in their nation (Seid 2018). In addition to these, the
national governments of the different nations of the world are also entrusted with the work of
devising the kind of regulatory measures which will help the business enterprises to not only
manage the diverse aspects of their business activities but also earn the derived level of
revenue or profitability as well (Adams and Opoku 2015). Thus, the role played by the
national government becomes one of the most important ones for the effective growth or the
development of the national economy of the nations.
2.3.4 Infrastructure of the nations
Papadopoulos, Hamzaoui-Essoussi and El Banna (2016) are of the viewpoint that the
different industries like the hospitality industry, tourism industry, transport industry and
others are heavily reliant on the infrastructure of the nations. In addition to this, it had been
seen that adequate infrastructure not only helps the different business enterprises to easily
procure raw materials or deliver their services or products to the markets or the customers but
also to develop the required kind of workplaces as well (Bowen 2019). This in turn becomes
important from the perspective of not only the business enterprises but also the national
government since the revenue or the profitability of the enterprises greatly depends on these
aspects. Thus, it can be said that the different nations of the world in order to bring about the
growth of their economy are required to undertake the development of the infrastructure of
their nation so as to support the different needs of the business enterprises operational in their
nation. Therefore, it can be said that the element of infrastructure is an important factor which
directly influences the economic growth attained by the nations.
2.4 Overview of the Trade sector and trade expansion
As opined by Farla, De Crombrugghe and Verspagen (2016), trade sector generally
refers to the portion or the section of the economy of a nation which is concerned with the
manufacture or the production of goods or services which are meant for trading and thereby
add value to the economy of the concerned nation. Adding to this, Mahmoodi and Mahmoodi
(2016) have commented that the goods or the services produced by the different business
corporations are meant for export to the other nations of the world. However, in some of the
cases it is also seen that the business corporations import certain specific goods or services

16FOREIGN DIRECT INVESTMENT AND TRADE
from the other nations of the world and upon modification or amendment sell them in the
domestic market of the nation of their operation (Hickson 2017). Furthermore, it had been
seen that the prospects of the trading enterprises and also the revenue generated by them are
directly related to the trade opportunities in the concerned nation and also the different
initiatives undertaken by the national government of the concerned nation (Alfaro 2016).
Thus, it can be said that one of the best ways through which the national government of the
nations can improve their national economy is through the enhancement of trade and
commerce. This in turn would help the different business enterprises to manufacture or
produce surplus amount of products or services which in turn would help them to earn a
higher amount of profitability or revenue.
2.5 Relationship between the trade sector and the economic growth of a nation
Iamsiraroj and Ulubaşoğlu (2015) are of the viewpoint that the different nations of the
world in order to effectively develop their national economy need to expand the trade and
commerce opportunities in their nation. This can be done through two, firstly through the
expansion of the domestic trade and commerce and secondly, international trade and
commerce. For the effective development of the domestic trade and commerce the national
governments are required to promote the growth of the indigenous business enterprises of
their nation (Danakol et al. 2017). Adding to this, Khoshnevis, Salehi and Soheilzad (2017)
have noted that the development of the indigenous industries is important since it will help in
the enhancement of the domestic trade and commerce within the concerned nation which in
turn is likely to lead to effective development of the economy of the nation. On the other
hand, as discussed by Azam and Ahmed (2015), for the development of the international
trade and commerce the national governments of the nations are required to establish
effective trade relations with the other nations of the world, particularly the nations adjoining
to them. In addition to this, the national governments are also required to take the help of
different kinds of initiatives which in turn would facilitate the growth or the development of
the multinational corporations operational in their nation. Furthermore, they are also required
to promote their nation as a favorable business hub which in turn would help them to get
foreign direct investments from the multinational corporations located in the other nations of
the world. In this regard, it needs to be said that the growth of trade and commerce of a nation
is directly tied up with the economic growth of the concerned nation (Leamer and Stern
2017). In the light of these aspects, it can be said that the economic growth of any nation is
directly linked up with the trade and commerce opportunities that the concerned nation offers

17FOREIGN DIRECT INVESTMENT AND TRADE
to the business enterprises operational in the concerned nation or for that matter the
expansion of trade and commerce.
2.6 Overview of the concept of Foreign Direct Investment (FDI)
As discussed by Sambharya and Rasheed (2015), foreign direct investment can be
seen as the kind of investment that the different multinational corporations make into the
business ventures of the other host nations for the expansion of the scope of their business.
Tan and Tang (2016) are of the viewpoint that the FDIs not only offers the ownership option
to the multinational corporations but also offers them the opportunity to use the different
resources as well as the brand image of the business enterprises that they have acquired. This
is important since one of the most important challenges that the different multinational
corporations expanding into the other host nations of the world commonly face can be
ascribed to the difficulty in gaining market share in the business market of the host nation
(Seyoum, Wu and Lin 2015). However, Jones and Wren (2016) have observed that through
the usage of this process or strategy the multinational corporations do not have to face this
difficulty since they have the option to rely on the brand image as well as the market share of
the enterprise into which they have invested. Thus, it becomes important for the national
government of the different nations to create the kind of business environment wherein the
multinational corporations would feel comforting investing into for the expansion of the
scope of their business. This in turn is directly linked up with the economic growth of the
nations since the different investments undertaken by the multinational corporations into the
business enterprises of the host nations in the majority of the cases revitalize the national
economy of the concerned nation.
2.7 Factors affecting the process of FDI
There are various factors which influence the decision of the multinational
corporations to undertake the process of FDIs into the business corporations of the various
host nations. Some of the most important factors in this regard are listed below-
2.7.1 Trade Policies of the Host nations
As discussed by Petras and Veltmeyer (2016), the trade policies which are being
followed by the national government of any nation directly influence the decision of the
multinational corporations to undertake investments into the business enterprises operational
in those nations. For example, if the trade policies of a particular nation are congenial or for
that matter favorable from the perspective of the business enterprises operational in the

18FOREIGN DIRECT INVESTMENT AND TRADE
concerned nation then it is more likely that the multinational corporations would undertake
the process of FDI in that particular nation (Papadopoulos, Hamzaoui-Essoussi and El Banna
2016). Iwasaki and Suganuma (2015) have stated that this is important since the trade
policies which are being followed within a particular nation are instrumental in the growth of
trade and commerce within the concerned nation and the multinational corporations often
look for those nations wherein there are opportunities for the expansion of their business. In
the light of these aspects, it can be said that the trade policies which are being followed
within a particular nation directly influence the decision of the multinational corporations to
undertake investments into the business enterprises of the concerned nation.
2.7.2 Business Rules and regulations
Khoshnevis, Salehi and Soheilzad (2017) are of the viewpoint that one of the most
important responsibilities of the national government of the different nations of the world is
to formulate various business rules and regulations which in turn would help the business
corporations to conduct their business activities in a congenial manner. On the other hand,
Hickson (2017) have noted that the business regulations formulated by the national
governments are not only related to the manner in which the enterprises are required to
conduct their business operations or activities but also related to the manner in which they are
required to handle or manage their employees, attain competitive advantage in the business
market, design the products or services offered by them, fix the price of the products or
services offered by them and other aspects. The different multinational corporations while
undertaking the process of FDIs generally look for the nations which have lenient or
congenial business rules and regulations so as to reap the maximum amount of benefit or
advantage by undertaking the same process (Pradhan 2017). Thus, it can be said that the
business rules or the regulations which are predominant within a particular nation is another
major factor which influence the decision of the multinational corporations to invest into the
business enterprises of the concerned nation.
2.7.3 Potential of the host business market
As discussed by Farla, De Crombrugghe and Verspagen (2016), the multinational
corporations generally like to invest in the business enterprises of those nations, the business
markets of which have shown potential growth or development opportunities. For example, if
the business markets of the host nations have already been captured or monopolized by the
business enterprises operational in the concerned nation then it is of no use for the
multinational corporations to enter into that market (Iamsiraroj and Ulubaşoğlu 2015). On the

19FOREIGN DIRECT INVESTMENT AND TRADE
other hand, if the business market of the host nation had not yet been developed then the
multinational corporations would have to make substantial investments for the development
of the business market of the concerned host nation along with the capital that they are
already investing into the business enterprise (Agrawal 2015). This process becomes a highly
expensive one for the multinational corporations and thereby they refrain from investing into
the business enterprises operational in such kind of markets. Thus, it can be said that the
potential of the host market is another major factor which influence the decision of the
multinational corporations to invest into the business enterprises of the concerned nation.
2.7.4 Economic condition of the host nation
Leamer and Stern (2017) are of the viewpoint that the condition of the national
economy of the host nation is an important factor which influences the decision-making
process of the multinational corporations to invest into the business enterprises of the host
nation. Adding to this, Iamsiraroj (2016) has stated that the stability or the strength of the
economy of the nations is important since it ensures the fact that the people of the concerned
nation would have the required amount of capital to purchase the products or the services
manufactured by the concerned nation. Danakol et al. (2017) have supported this by
suggesting that if the people of a particular nation do not have the required amount of capital
to buy the products or services offered by a particular business enterprise then it will be futile
for the multinational corporations to invest into the business enterprises of the concerned
nation. Thus, the economic condition of the host nations is an important factor which
influences or affectthe decision of the multinational corporations to invest into the business
enterprises of a particular host nation.
2.8 Relationship between FDI and economic growth of a nation
As discussed by Kaushal and Pathak (2015), there exists a profound or direct
relationship between the FDIs and the economic growth of the nations or for that matter the
different business sectors of the nations which in turn directly influence the economic growth
of the concerned nations. For example, it had been noticed that the FDIs bring in the much
needed economic input into the different industries of the nations which in turn revitalizes the
national economy of the nation (Gui-Diby and Renard 2015). Adding to this, Sapkota and
Bastola (2017) have noted that the investments which are being made through the process of
FDIs offer the business enterprises the required amount of capital or funds to enhance the
amount of products or services manufactured by them. This in turn offers them the
opportunity to earn a higher percentage of revenue by catering to the demands of a larger

20FOREIGN DIRECT INVESTMENT AND TRADE
target audience or customer base and thereby contribute effectively towards the economic
growth of nations. Furthermore, within the particular context of the majority of the nations of
the world it had been seen that different industries are interlinked with each other not only on
the score of the services or products that they offer to the customers or the business models
that they use but also on account of the resources that they use for the effective conduct of
their business operations (Seyoum, Wu and Lin 2015). Thus, it can be said that the FDIs
indirectly affect all the major industries or the business enterprises of the nations in which
they are being undertaken regardless of the industry to which they belong or the nature of the
services or products that they offer. In the light of these aspects, it can be said that the
national government of the different nations in order to effectively bring about the economic
growth of their nations need to enhance the number of FDIs that the business enterprises
operational in their nation gets.
2.9 Challenges related to FDIs
The FDIs have been instrumental in facilitating the economic growth of the different
nations of the world however at the same time it is seen that there are various challenges
associated with the usage of the same. Iamsiraroj and Ulubaşoğlu (2015) are of the viewpoint
that an important challenge that the different nations face related to the FDIs can be attributed
to the fact that it takes a negative toll on the domestic or the household industries of the
concerned nation. For instance, it had been seen that the different foreign business
corporations in order to penetrate the market of the host nations and also to attract the
customers offer high quality products or services at comparatively lower prices and also use
innovative business strategies in comparison to the domestic business corporations of the host
nations (Pradhan 2017). This puts the domestic business corporations at a great disadvantage
which in turn makes it very difficult for them to compete with the foreign business
corporations. Another important adverse effect of the FDIs on the host nations can be
attributed to the fact that although the foreign corporations utilize the natural and the other
resources of the host nations yet no substantial contribution apart from the economic
contribution is being made by them towards the growth of the host nations (Hickson 2017).
These in short are the two major challenges associated with the usage of the FDIs which the
host nations face.
2.10 Summary
In this chapter, the researcher had discussed the different important theoretical
underpinnings, concepts and others related to the concepts of economic growth, foreign direct

21FOREIGN DIRECT INVESTMENT AND TRADE
investments and trade expansion. These ideas outlined in this chapter are likely to help the
researcher to effectively discuss the findings obtained from the primary data in the fourth
chapter of the study, namely, “Findings and Discussion”. This chapter will be followed by the
chapter “Research Methodology”.

22FOREIGN DIRECT INVESTMENT AND TRADE
Chapter 3: RESEARCH METHODOLOGY
3.1 Introduction
Alvesson and Sköldberg (2017) have noted that research methodology is the
systematic or organized approach which is being adopted by the researchers for conducting
research works. Adding to this, Taylor, Bogdan and DeVault (2015) have noted that an
effective usage of research methodology requires the researchers to take into account the
diverse facets of the same like research design, research approach, research philosophy, data
collection process and others. In this chapter, the researcher intends to highlight the different
entities of research methodology which had been used for conducting research work. More
importantly, the researcher also offers detailed justification for the different approaches
which had been selected for conducting the research.
3.2 Research Philosophy
As discussed by Silverman (2016), the entity of research philosophy is the
conglomeration of the values, beliefs and other aspects which directly influence the style or
the manner in which a particular research is being conducted by the researchers. More
importantly, as opined by Kumar (2019), the concept of research philosophy also dictates the
different approaches or the facets of the research methodology which are being used by the
researchers. Furthermore, it had been seen that there are three common research philosophies
which are being used by the researchers for the completion of their research works, namely,
pragmatism, positivism and interpretivism research philosophies (Flick 2015). According to
Quinlan et al. (2019), the use of the positivism research philosophy requires the scholars or
the researchers to take into account the different opinions, observations, figures, numerical
data and others for the purpose of supporting the diverse assumptions as well as hypotheses
that they are making in the study. Thus, the researchers using this particular research
philosophy need to formulate relevant hypotheses at the very beginning of the study and
thereby take the help of the required primary data or secondary data for the purpose of
proving the accuracy or the validity of the same. The usage of the interpretivism research
philosophy is greatly dependent on the aspect of human behavior (Fletcher 2017). Thus, the
researchers are required to differentiate between the social factors and the human behavior.
Furthermore, as stated by Walliman (2017), interviews, observations and others are most
commonly used methods by the researchers for the collection of the required data needed for

23FOREIGN DIRECT INVESTMENT AND TRADE
the completion of their research work. Lastly, the pragmatism research philosophy is being
used by the researchers when they want to analyze the topic that they had selected for
research from the perspective of different viewpoints since a single viewpoint or idea cannot
effectively answer the different research questions that the researchers formulate for their
research work (Smith 2015).
3.2.1 Justification for the Selected Research Philosophy
The researcher for the completion of this research work will take the help of the
positivism research philosophy. The effective usage of this research philosophy will enable
the researcher to critically analyze the research questions which were formulated, through the
perspective of different numerical data, facts, figures, opinions, observations and others.
More importantly, the researcher had opted for the usage of this particular research
philosophy in contrast to the interpretivism research philosophy or the pragmatic research
philosophy because of its focus on the aspect of factual knowledge which had been obtained
through observation and thus the data or the information is not only reliable but trustworthy
as well. Thus, it is likely that through the usage of this particular research philosophy the
researchers would be able to objectively analyze the impact of FDIs and trade expansion on
the economic growth of India.
3.3 Research Design
According to Bell, Bryman and Harley (2018), exploratory, descriptive and
explanatory research designs are the three most commonly used research designs by the
different researchers. McCusker and Gunaydin (2015) have noted that for the effective usage
of the exploratory research design the researchers need to outline or for that matter highlight
the problem statement or the background information of the research objectives that they
have selected for the conduct of the research. Moreover, the researcher for the usage of the
explanatory research design are also required to find out as well as analyze the factors or the
root causes that have led to the emergence of the problem which is being analyzed by the
researcher (Silverman 2016). In complete contrast to this, for the usage of the descriptive
research design the researchers are required to correlate the research objectives that they have
formulated in the first chapter of the research with the findings that had been obtained from
the primary or the secondary data that is being used by them (Fletcher 2017).

24FOREIGN DIRECT INVESTMENT AND TRADE
3.3.1 Justification for the Selected Research Design
The researcher had opted for the descriptive research design. This is likely to help the
researcher to relate the findings of the research with the research objectives articulated by the
researcher in the introductory chapter of the study. This will help the researcher to attain the
necessary coherence within the study and thereby enhance the quality of the entire study as
well. Furthermore, the researcher had rejected the exploratory research design and the
explanatory research designs since the focus of these two research design is more on the
analysis of the background information or the problem statement of the study rather than the
topic selected for the study itself and they do not offer the opportunity to the researchers to
attain to required coherency within their study. It is in the light of these aspects that the
researcher had opted for the usage of the descriptive research design.
3.4 Research Approach
Taylor, Bogdan and DeVault (2015) have discussed that two of the most important
and commonly used research approaches which are being used by the researchers for the
completion of their research work deductive and inductive research approaches. As discussed
byAlvesson and Sköldberg (2017), the usage of the deductive research approach requires the
researcher to take the help of different models, framework, theories and others for the
analysis of the research topic which they have selected. Furthermore, the researchers for the
effective usage of this research approach are required to formulate hypotheses, undertake data
analysis and others for the completion of the research. This is important since it helps the
researchers to analyze or test the validity or the accuracy of the research hypotheses or for
that matter the theoretical frameworks that they have used in the research work (Flick 2015).
On the other hand, for the usage of the inductive research approach the researchers need to
take the help of different kinds of analytical tools for the data or the information that they
gathered for the completion of the research (Smith 2015).
3.4.1 Justification for the Selected Research Approach
The researcher had opted for the usage of the deductive research approach for the
effective completion of this research approach. This will help the researcher to test the
accuracy or the validity of the data collected for the conduct of the study through the lens of
different theoretical frameworks, models, frameworks and others. This is important from the
perspective of the study under discussion here since it will enable the researcher to test the
reliability as well as the validity of the information or the data which would be offered by the

25FOREIGN DIRECT INVESTMENT AND TRADE
eight participants in the interview. This in turn would offer the researcher the opportunity to
enhance the accuracy as well as the reliability of the study and thereby its quality as well.
3.5 Data Collection Method
As discussed by Walliman (2017), two of the most commonly used or important data
collection methods which are often used by the different researchers are primary data
collection method and secondary data collection method on the basis of the kind of the study.
McCusker and Gunaydin (2015) have noted that the use of the primary data collection
process requires the researchers to collect primary or for that matter firsthand data from the
respondents regarding the topic on which they are conducting their study. The researchers
taking the help of this data collection process generally take the help of the tools of surveys,
interviews and others. In contrast to this, as stated by Quinlan et al. (2019), the usage of the
secondary data collection process requires the researchers to take the help of different
newspaper articles, peer-reviewed articles, credible webpages and other pieces of secondary
sources of information for the completion of their research work.
3.5.1 Justification for the Selected Data Collection Method
The researcher on the basis of the research topic that had been selected for this study
had taken the help of the primary data collection process which in turn would enable the
researcher to collect firsthand data from the respondents. In this relation, it needs to be said
that the researcher had not taken the help of secondary data collection method since the data
collected through the secondary data collection are often inaccurate, entail a significant
amount of bias of the researcher and also it is very difficult to obtain data related to the
samples of the population that the researcher intends to analyze in the study. It is in the light
of these aspects that the secondary data collection method had been rejected by the researcher
and the primary data collection method had been used for the collection of the data needed
for the completion of this study. Furthermore, the researcher will take the help of the tool of
interview and conduct interview with eight professionals related to the corporations, Tata
Consultancy Services and Flipkart, of India to understand the impact of foreign direct
investment and trade expansion on the national economy of India.
The researcher had conducted interviews with 4 Managers from Tata Consultancy
Services and 4 Managers from Flipkart since their corporations while being the key players
within the Indian business sector had also undertaken FDIs within the concerned nation and
also in the other nations. Furthermore, they also vast knowledge about the business of these

26FOREIGN DIRECT INVESTMENT AND TRADE
corporations, the Indian economy and its present condition and other aspects related to the
same. Thus, it is likely that they would be having a working knowledge about foreign direct
investments, trade and commerce, impact of FDIs on the economy of a nation, its negative
implications and others. In addition to these, Tata Consultancy Services and Flipkart are two
of the biggest business corporations within the nation of India which over the years had made
a direct contribution towards the economic growth of the nation of India while being able to
attract various international corporations to invest in their business. For instance, in the year
2019 itself the global automobile giant General Motors (GM) invested into the corporation
Tata Consultancy Services because of which Tata started the manufacture, supply and the
sale of GM automobiles in the southern part of India (Economictimes.indiatimes.com 2020).
On the other hand, Flipkart was being able to attract an investment of $10 billion in the year
2019 from Walmart which was a result of Walmart’s initiative to overcome the threat posed
by the extensive growth of Amazon (Economictimes.indiatimes.com 2020). Thus, in the light
of these aspects, it can be said that the managers related to the two Indian corporations whom
the researcher had selected for interviewing are in an ideal position for providing the required
data or information to the researcher on the score of the relevance of the research topic
selected by the researcher to them and their corporation.
3.6 Data Analysis Method
As discussed by Fletcher (2017), two of the most popular or commonly used data
analysis methods for the analysis of the primary or the secondary data that the researchers
have collected for their research work are quantitative data analysis method and qualitative
analysis method. Alvesson and Sköldberg (2017) have noted that the usage of the quantitative
data analysis helps the researchers to analyze the primary data that they have collected
whereas the method of qualitative data analysis is used for the analysis of the secondary data
that the researchers have collected.
3.6.1 Justification for the Selected Data Analysis Method
The researcher had taken the help of the primary qualitative data analysis method. The
effective usage of this data analysis will help the researcher to effectively analyze the primary
data collected by the researcher through the usage of the tool of interview.
3.7 Ethical Considerations
The researcher intends to comply with the ethical standards of conducting academic
research. For example, during the process of interview no personal or private questions were

27FOREIGN DIRECT INVESTMENT AND TRADE
being asked and also the data which had been collected through the interview would be used
only for the purpose of the research. Furthermore, the names of the interviewees have been
kept confidential by the researcher so as to adhere to the aspect of research ethics. In addition
to these, the researcher in order to avoid plagiarism had given credit to the authors or the
scholars whose works have been used or taken into account for the completion of the study
by way of the usage of in-text citations and a reference list at the end of the study.
3.8 Limitations of the Study
The researcher because of time and resource constraints and also due to accessibility
issues had interviewed only eight professionals. However, the quality of the work could have
been improved in a substantially manner had the researcher been able to interview more
professionals. In addition to this, the usage of the construct of survey for the purpose of
collecting data would also have enhanced the accuracy or the credibility of the study in a
substantial manner by helping the researcher to reach out to a larger number of professionals.
These in short are some of the major limitations of the study or the research work.
3.9 Summary
In this chapter, the researcher highlighted the different facets of the research
methodology which was used for the conduct of the research. This chapter will be followed
by the chapter “Findings and Discussion”.

28FOREIGN DIRECT INVESTMENT AND TRADE
Chapter 4: FINDINGS
4.1 Interview Transcripts
4.1.1 Interview 1
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I am presently working with Tata Consultancy Services in the capability of a
Branch Manager and I am entrusted with the work of managing the different work processes
of our branch in Chennai, India.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: Yes, I would say that the growth of trade and commerce is an important factor
which had positively affected the economic growth of India by facilitating both the import
and export of goods, increased circularity of goods or services and thereby their increased
sales and others. In my organization itself, the growth of trade and commerce within India
had enabled us to offer different services to our customers, indulge in international trade and
others which in turn had positively affected the revenue earned by us and also increased the
amount of tax money paid by us to the Indian government. The other corporations of India
have also similarly benefited through the growth of trade and commerce which in turn had
positively affected the national economy of India by enhancing the tax money earned by it,
helped it to attract FDIs, reduction of unemployment rate and others.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: I certainly agree with the fact that the numerous FDIs that India had been able to
attract in the recent years had positively affected the Indian economy. This while increasing
the amount of tax money, subsidies and others earned by the Indian government had also
reduced its unemployment rate, facilitated the infrastructural development of the India and
others which in turn had contributed towards the stabilization as well as the growth of the
Indian economy.

29FOREIGN DIRECT INVESTMENT AND TRADE
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Indian in the recent years had substantially relaxed its trade policies, business
regulations, its FDI norms and others which in turn had helped it to attract large number of
FDIs. Furthermore, the different initiatives undertaken by the Indian government for the
growth of trade and commerce within the nation, the congenial relation that the nation shares
with the other nations, the growth shown by the Indian economy in the recent years and
others have also contributed towards the same.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: I think that along the relaxation of the FDIs policies the growth shown by the
Indian economy in the recent years is an important factor which had directly contributed
towards the large number of FDIs that the concerned nation had been able to attract in the
recent years. For instance, the exponential growth shown by the Indian economy in the recent
years had provided the required assurance to the international corporations that if they are
able to make the right of amount of investment in the right sector and also take the help of
effective strategies then they would be able to attain the desired level of growth.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I think that an important negative aspect of the large number of FDIs that India
had received in the recent years is the fact that it had stunted the growth of the domestic
corporations of the concerned nation by intensifying business competition in the different
industries. I would say that in the longer run this is likely to adversely affect the Indian
economy.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think that the relaxation of the FDI policies, business regulations, stabilizing the
political condition and others are some of the most ways through which India can attract even
higher number of FDIs than it is getting presently. More importantly, some of the
international corporations in the recent years had faced various issues in India which had

30FOREIGN DIRECT INVESTMENT AND TRADE
adversely affected their business prospects in India and this in turn had negatively impacted
the image of India in the international business arena. Thus, I think that the improvement of
its image in the business business arena is another important measure that India needs to use
for increasing the number of FDIs.
4.1.2 Interview 2
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I am working as an Operations Manager in the corporation Tata Consultancy
services and my primary job role within the corporation is to ensure the fact that the different
operations processes of the corporation are being adequately managed.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: I think that the growth of trade and commerce is an important factor which had
affected the economic growth of the nation of India. As a matter of fact, the enhancement of
both the domestic and the international trade had positively affected the Indian economy and
thereby made it one of the most important developing economies of the world.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: I believe that not only in the context of India but in the context of all the nations
FDI is an important determinant of the economic growth of the nations. The more FDIs a
particular nation gets the more changes it has to have a stable as well as thriving economy.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: The first and the foremost thing that the different international business
corporations take into account before undertaking any FDIs is the trade policies or the
business regulations which are being followed within the nation into which they are about to
invest. In the particular context of the nation of India, I would say that the relaxation of the
trade and the business policies have significantly influenced the number of FDIs that it is
presently getting which in turn had positively affected the economy of the concerned nation
as well.

31FOREIGN DIRECT INVESTMENT AND TRADE
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: As I mentioned, FDIs are an important determinant of the economic growth of
any nation and if look at some of the largest economies of the world you would see that they
are being attract a large number of FDIs on a regular basis. This even holds true in the
particular context of the nation of India as well wherein the large number of FDIs that the
concerned nation had been able to attract in the recent years had directly contributed towards
its economic growth.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I think that because of the large number of FDIs that India is presently receiving
the different household industries and even the domestic corporations are facing intense
competition which in turn had slowed down their growth rate and even forced some of them
to shut down their operations as well.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think that the Indian government needs to further relax its FDIs, trade
regulations and also create an adequate image of the business sector of the concerned nation
as the sector with extensive growth potential. These measures are likely to help the Indian
government to attract more FDIs.
4.1.3 Interview 3
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I would as the Regional Manager of Tata Consultancy Services and my job role is
to manage the work of the different offices that we have in the Northeastern India.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: Yes, I think that the growth of trade and commerce in the recent years is an
important factor that had directly contributed towards the growth of the Indian economy and

32FOREIGN DIRECT INVESTMENT AND TRADE
with it the Indian economy would not have been able to attain the stability as well as the
growth that it presently has.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: I don’t ardently believe in the fact that FDIs are integral to the growth of the
national economy of India. On the other hand, I believe in the idea that the different FDIs
have sapped the domestic corporations of India which in the longer run is likely to become
problematic for India.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Yes, the Indian government in order to attract FDIs from the different
international corporations had substantially relaxed its business regulations, trade policies and
even the FDI norms which in comparison to the earlier times are very lenient presently.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: The growth registered by any nation is an important factor which influences the
international corporations to undertake FDIs in the concerned nation. This is evident even in
the context of the nation of India wherein the extensive growth registered by the Indian
economy had helped the nation to attract FDIs from almost all the major international
corporations in the recent years.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: As I already mentioned, the FDIs are sapping the life out of the different domestic
corporations of India which would adversely affect the economic growth of India in the long-
term range.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think that the most important thing which the Indian government needs to do to
attract more FDIs is to improve the image of the concerned nation in the international arena.

33FOREIGN DIRECT INVESTMENT AND TRADE
This is important since in the recent years it had been seen that some of the international
corporations had negative experiences in India which in turn had influenced many
international corporation to not invest into the business sector of India.
4.1.4 Interview 4
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I am the Finance Manager of Tata Consultancy Services for the Northeastern
region in India and my primary job role within the corporation is to manage the budget as
well as the finance of the corporation in the concerned region.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: I would say that the economic growth which India had been able to attain in the
recent years is the direct result of the initiatives undertaken by the Indian government for the
growth of trade and commerce within the nation. More importantly, in the recent years it had
also been seen that the Indian government for boosting its national economy had also tried to
establish trade relations with the other nations of the world as well.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: The last ten years had been the golden decade for India from the perspective of
the number of FDIs that it had received. The large number of FDIs that it had received in the
last decade is one of the most important factors which had contributed the economic growth
of the concerned nation.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: The Indian government at the beginning of the 21st century realized the fact that
the trade policies, business regulations and also the FDI norms which were being followed by
it were very stringent and these in turn deterred the international corporations from investing
in the nation. Thus, in the recent years the Indian government had relaxed its business
regulations and also the FDIs norms which in turn had enabled it to attract a large number of
FDIs.

34FOREIGN DIRECT INVESTMENT AND TRADE
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: The Indian economy is one of the fastest growing economies of the world with
almost all the sectors of the concerned nation showing positive signs of growth in the last two
decades. I think that this growth potential of the different sectors of India along with the
growth shown by its economy is are important factors which had helped the nation to attract a
large number of FDIs.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: The only negative effect of the FDIs which I see on the Indian economy is related
to the fact that it slowed down the growth rate of the different domestic business corporations
of the concerned nation.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think that India has the opportunity to attract even more FDIs if the FDIs norms
and also the business norms of the nation are being relaxed further which I still feel are
stringent in comparison to the ones that are being followed by the other nations of the world.
4.1.5 Interview 5
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I work for the company Flipkart as a Senior Operations Manager and my primary
job role is to ensure the fact that all the operations processes of the corporation are being
managed effectively.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: Yes, it is true that the growth of trade and commerce in the recent years in the
nation of India had directly contributed towards the economic growth of the concerned
nation. As a matter of fact, rather than merely focusing on the growth of domestic trade the

35FOREIGN DIRECT INVESTMENT AND TRADE
Indian government is presently trying to establish trade relations with nations like USA,
Canada, UK and others to facilitate its economic growth.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: Yes, I think that the ever-increasing number of FDIs that India is presently getting
is an important factor which had directly contributed towards the economic growth of the
concerned.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Yes, I think that the trade policies as well as the business regulations of India had
directly helped the concerned nation to attract a large number of FDIs in the recent years.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: I firmly believe that the different international corporations generally like to
invest in the business markets of the nations which had shown a high growth rate or growth
potential in the recent years. In the case of India it is seen that the concerned nation had been
able to maintain a steady growth rate in the last few years which in turn had helped it attract a
large number of FDIs in the recent years.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I think that it had flooded the Indian market with a plethora of products and
services which in turn had led to the growth issues that the different domestic corporations
are presently facing within the framework of the concerned nation.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think the Indian government needs to formulate effective FDI norms along with
lenient business regulations which in turn would help it to attract a large number of FDIs.

36FOREIGN DIRECT INVESTMENT AND TRADE
4.1.6 Interview 6
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I presently work as a Manager in the corporation Flipkart and my job role as a
Manager within the corporation is to ensure the fact that diverse business processes are being
managed adequately along with ensuring that the workers are performing as per the
organizational standards and its expectations.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: I think that the trade and commerce is an important determinant of the economic
growth of any nation and it is because of this reason the Indian government had forced on the
growth of trade and commerce which in turn had facilitated the economic growth of the
concerned nation. The resultant effect of this is that in the recent times India is trying to
improve its trade relations with the SAARC, Commonwealth nations and others.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: The FDIs substantially enhance the trade and commerce within a nation, make
contributions towards the reduction of unemployment, the government also get their share of
the tax money, subsidies and others which in turn positively reflect in the economic growth
attained by the nations. More importantly, the numerous FDIs that India had been able to get
in the recent years while enhancing the revenue earned by the national government from the
same had also reduced the unemployment rate of the India and thereby made a positive
contribution towards the Indian economy.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Yes, they have actually helped India to attract a large number of FDIs in the
recent times.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?

37FOREIGN DIRECT INVESTMENT AND TRADE
Answer 5: I would not say that the FDIs which India had received in the recent years is the
sole factor which had contributed towards the economic growth of India but it certainly is one
of the most important factors which had facilitated the growth of Indian economy in the
recent years.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I do not think that extensive reliance on the FDIs for facilitating economic
growth is a sustainable practice and this is likely to adversely affect the growth rate of the
Indian economy in the longer run.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: India needs to significantly improve its image within the international business
world for the purpose of attracting more FDIs.
4.1.7 Interview 7
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I am presently working as a Supply Chain Manager with Flipkart and my job role
is to handle the processes related to supply chain management within the company.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?
Answer 2: India in the recent times had been able to enhance the volume of trade and
commerce conducted within the nation and also overseas courtesy of the initiatives
undertaken by the Indian government and this in turn had positively affected the growth of
the Indian economy.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: The FDIs by increasing the volume of trade and commerce of India along with
offering other benefits had made a positive contribution towards the economic growth of
India.

38FOREIGN DIRECT INVESTMENT AND TRADE
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Any international corporation selects the nations for investing on the basis of the
trade policies and the business regulations which are being followed within the same. Thus, it
can be said that the favorable trade policies and also the business regulations of India had
influenced the international corporations to undertake investments into the concerned nation.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: Yes, the growth potential or the annual growth rate shown by the Indian economy
is an important factor which had helped the nation to attract a large number of FDIs in the
recent years.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I think that by substantially intensifying competition within the different
industries they have substantially slowed the growth rate of the domestic corporations and
also the household industries of India which in the earlier times were the backbone of the
Indian economy. This in the longer run would adversely affect the Indian economy.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think the Indian government needs to improve its FDI norms along with the
business regulations which are being followed by it for attracting a larger number of FDIs.
4.1.8 Interview 8
Question 1: Kindly specify the name of the corporation with which you are presently
associated with, your role and designation within the same
Answer 1: I am the Regional Manager of the southern division of Flipkart and my job role is
to manage the work processes and also the business of the different offices of Flipkart in
South India.
Question 2: Do you think the growth of trade and commerce is an important factor which
had affected the economic growth of India?

39FOREIGN DIRECT INVESTMENT AND TRADE
Answer 2: I am of the viewpoint that the economic growth of India in the recent years had
been influenced by the growth of trade and commerce within the concerned nation.
Question 3: Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
Answer 3: I think that the large number of foreign direct investments that India had been able
to attract in the last few years is an important factor which had contributed towards the
economic growth of India.
Question 4: Do you think the trade policies and the business regulations of India had helped
the nation to attract a large number of Foreign Direct Investments in the recent years?
Answer 4: Yes, I think the lenient business regulations and also the effective trade policies
which are being followed by the Indian government had helped it to attract numerous FDIs in
the recent years.
Question 5: Do you think the growth potential shown by the Indian economy in the recent
years is an important factor which had helped it to attract a large number of FDIs?
Answer 5: I think that the annual growth rate and also the growth potentiality shown by the
Indian economy in the last decade is an important factor which had helped the nation to get
numerous FDIs.
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Answer 6: I think the FDIs are completely obliterating the household industries and also the
different domestic corporations of India which are likely to negatively affect the Indian
economy since in the earlier times they formed the backbone of the Indian economy.
Question 7: What according to you are the important measures that the Indian government
needs to undertake so as to attract more FDIs?
Answer 7: I think India needs to substantially improve its image within the international
business arena which in turn would enable it get the required number of FDIs.

40FOREIGN DIRECT INVESTMENT AND TRADE
Chapter 5: DISCUSSION
5.1 Introduction
In this chapter, the researcher undertakes a critical or analytical discussion of the data
or responses collected from the respondents of the interview. This analysis would be
conducted on the basis of the theme of the questions which were formulated keeping into
perspective the research objectives formulated in the first chapter of the study. More
importantly, the researcher will link the information or the data collected from the interview
with the concepts which were highlighted in the literature review chapter of the study. This
will help the researcher to address the research questions in an effective manner in the last
chapter of the study and thereby attain the necessary coherence in the study.
5.2 Discussion of the Findings
Question 2: Do you think the growth of trade and commerce is an important factor
which had affected the economic growth of India?
Interpretation of the Responses: All the eight managers who participated in the interview
replied positively to this question and stated that the growth of trade and commerce within
the nation of India in the recent years had directly contributed towards the economic growth
of the concerned. For instance, the managers stated that the growth of trade and commerce
had enhanced the “mobility and supply of different commodities or services” within the
nation, enhanced “international trade”, “increased the amount of tax money” paid by the
corporations, “reduced the unemployment rate of India” and others which in turn had
positively contributed towards the growth of the Indian economy. More importantly, they
also concurred on the idea that the different initiatives undertaken by the Indian government
in the recent years while enhancing the volume of both domestic and international trade had
positively contributed towards the economic growth of the nation under discussion here. This
even becomes apparent from the research work of Iamsiraroj and Ulubaşoğlu (2015) which
stated that the economic growth of any nation is hugely reliant on the trade and commerce of
the concerned nation. On the other hand, the research conducted by Pradhan (2017) also
indicates the fact that the profitability earned by the business enterprises of any nation is
greatly reliant on the degree to which they are being able to conduct trade and commerce
within the framework of any nation. For example, the degree to which the business
enterprises are being to effectively cater to the needs or the demands through the supply of

41FOREIGN DIRECT INVESTMENT AND TRADE
the products or services manufactured by them is dependent on the expansion of trade and
commerce of the nation of their operation. Furthermore, Alfaro (2016) has also suggested the
fact that the nations with adequately level of expansion of trade and commerce are being able
to attain a higher level of economic growth and vice versa. In the light of these aspects, it can
be said that the expansion of trade and commerce in the face of the different initiatives
undertaken by the Indian government for the expansion as well as the growth of the same
within the concerned nation had directly contributed towards the growth of the Indian
economy in the recent years. This as a matter of fact has important implications for the nation
of India since the concerned nation for the purpose of facilitating the growth its economy
even further has the opportunity to take the help of suitable measures which in turn would
positively affect the same and also contribute towards its growth or development as well.
Question 3: Do you think the increasing number of foreign direct investment is an
important factor which had contributed towards the economic growth of India?
Interpretation of the Responses: This particular question was asked by the researcher to
understand the extent to which the enhancement of the number of the foreign direct
investments that he nation had been able to attract in the recent years had contributed towards
the growth of its economy. In this relation, it needs to be said that all the managers who
participated in the interview agreed on the idea that the different FDIs which India had
received in the recent years had positively contributed towards the economic growth of the
concerned nation. For instance, they suggested that the numerous FDIs that India had
received in the recent years while increasing the volume of trade and commerce both
domestic and international conducted by the nation had also increased “the amount of tax
money, subsidies and others earned by the Indian government”, “reduced its unemployment
rate”, “facilitated the infrastructural development of the India” and others which in turn while
stabilizing the Indian economy had also contributed towards its overall growth or
development in the recent years. This even becomes evident from the research work of Gui-
Diby and Renard (2015) which suggest that the economic growth attained by any nation is
directly dependent on the number or the amount of FDIs that it gets from the multinational
corporations. On the other hand, the research conducted by Seyoum, Wu and Lin (2015) have
indicated the fact that the nations which get a large number of FDIs are able to attain higher
economic growth in comparison to the ones that get a lower number of FDIs. Adding to this,
Sapkota and Bastola (2017) have noted that the different FDIs while increasing the volume of
trade and commerce within the nations also helps them to tackle issues unemployment,

42FOREIGN DIRECT INVESTMENT AND TRADE
inadequate infrastructure and others which in turn directly contribute towards the economic
growth of the concerned nations. Thus, it can be said that the ever-increasing number of FDIs
that India had been able to able to attract in the recent years had positively contributed
towards the economic growth of the concerned nation. This as a matter of fact has important
implications for the concerned nation since the nation in order to accelerate the pace of its
economic development has to opportunity to attract a higher number of FDIs from the
different international corporations.
Question 4: Do you think the trade policies and the business regulations of India had
helped the nation to attract a large number of Foreign Direct Investments in the recent
years?
Interpretation of the Responses: This question was asked by the researcher to understand
the impact of the trade policies and also the business regulations which are being followed by
a particular nation on the number of foreign direct investments that the concerned nation gets.
In this connection, it needs to be said that all the managers highlight the fact that the trade
policies and the business regulations followed by the Indian nation have played a pivotal role
in helping the nation to attract a large number of FDIs in the recent times. For instance, they
indicated that the “relaxation of business regulations”, the “formulation of congenial trade
policies” through which the concerned nation had been able to increase both the domestic and
the international trade conducted by it, the formulation of congenial relations with the
different “SAARC nations, Commonwealth nations” and others are some of the most
important factors which had helped the nation to attract a large number of FDIs in the recent
years. These aspects even become evident from the research conducted by Petras and
Veltmeyer (2016) the results of which state that the trade policies which are being followed
by the national government of any nation directly influence the decision of the multinational
corporations to undertake investments into the business enterprises operational in those
nations. Supporting this Papadopoulos, Hamzaoui-Essoussi and El Banna (2016) have noted
that if the trade policies and also the business regulations followed by the nations are suitable
or congenial for the different international corporations then it is more likely that they would
have undertake FDIs in the concerned nation and vice versa. Thus, in the particular context of
the nation of India it can be said that the congenial trade policies and also the business
regulations followed by the concerned nation had directly contributed towards the large
number of FDIs that the concerned nation had been able to get in the recent years. This as a
matter of fact has important implications for the nation of India since the concerned nation

43FOREIGN DIRECT INVESTMENT AND TRADE
has the opportunity to attract even more FDIs and thereby facilitate the growth of its
economy even further by formulating the kind of trade policies and also business regulations
which in turn would help it to attract more FDIs.
Question 5: Do you think the growth potential shown by the Indian economy in the
recent years is an important factor which had helped it to attract a large number of
FDIs?
Interpretation of the Responses: The eight managers who participated in the interview
agreed on the idea that the growth potential shown by the Indian economy in the recent years
is an important factor which had helped it to attract a large number of FDIs. For instance, the
managers stated the “favorable trade and commerce policies” followed by the Indian
government while helping the business sector of the concerned nation “to maintain a high
growth rate or growth potential” has also offered “the required reassurance to the different
international corporations” regarding the future of the Indian business sector. This in turn had
influenced the international corporations from the different nations of the world to undertake
foreign direct investment within the nation under discussion here. This even becomes
apparent from the research work of Farla, De Crombrugghe and Verspagen (2016) which
suggest that the multinational corporations generally like to invest in the business enterprises
of those nations, the business markets of which have shown potential growth or development
opportunities. On the other hand, the research of Iamsiraroj and Ulubaşoğlu (2015) indicates
that if the business markets or for that matter the business sectors of any host nation had
already been monopolized by the existing business corporations of the concerned nation then
it is seen that the international corporations generally do not like to undertake FDIs in the
concerned host nation and vice versa. Lastly, Leamer and Stern (2017) has noted that the
economic condition of the host nations along with its growth rate is perhaps one of the most
important factors which the different international corporations take into account before
investing into the business market of any host nation. Thus, in the light of these aspects, it can
be said that the high growth potential shown by the Indian economy in the recent years is an
important factor which had helped the concerned nation to attract a large number of FDIs.
This has important implications for the nation of India since the nation in order to increase
the number of FDIs that it is presently getting needs to accelerate the growth rate of its
national economy.

44FOREIGN DIRECT INVESTMENT AND TRADE
Question 6: In your view how will you see the negative effects of FDIs on the Indian
economy?
Interpretation of the Responses: The managers who participated in the interview agreed
upon the idea that the different FDIs have adversely affected the domestic corporations and
also the household industries of the nation of India. Furthermore, the “intense competition”
that these corporations are presently facing had led to the decline of their profitability and the
issue becomes grim since one point of time they “formed the backbone of the Indian
economy”. More importantly, they also stated that this is an “unsustainable growth strategy”
followed by the Indian government since in the longer-run it is likely to adversely affect the
economic growth of the nation under discussion here. This even becomes apparent from the
research work of Picciotto and Mayne (2016) which stated that the over-reliance of the
consumers on the foreign brands is likely to eliminate the key domestic business enterprises
within a particular business sector by enhancing the business competition in the same.
Elaborating on this, Pradhan and Singh (2017) have noted that this particular issue if not
managed adequately can adversely affect the national economy of the different nations of the
world through the obliteration of the domestic and the household industries which once had
formed the backbone of the economic framework of the nations. In the light of these aspects,
it can be said that the damage that the FDIs are causing to the domestic and the household
industries of the nation of India is an important negative effect of the same on the Indian
economy.
Question 7: What according to you are the important measures that the Indian
government needs to undertake so as to attract more FDIs?
Interpretation of the Responses: All the managers who participated in the interview
concurred on the measures that India needs to follow for enhancing the number of FDIs that it
gets. For instance, according to them, some of the most important measures which can be
followed by the Indian government are “relaxation of the business regulations, FDI norms”,”
improvement of the trade policies”, “improvement of the image of India in the international
business arena” and others. This as a matter of fact finds adequate amount of support from
the research work of Seyoum, Wu and Lin (2015) which suggests that trade policies, FDI
norms, business regulations and others some of the most important factors which affect the
intention of the international corporations to undertake FDI in a particular nation. Thus, it can
be said that the Indian government needs to improve its image in the international business

45FOREIGN DIRECT INVESTMENT AND TRADE
world, improve its trade policies, business regulations and also the FDI norms for attracting
more FDIs.
5.3 Summary
To sum up, the researcher in this chapter undertook a critical analysis of the
information or the findings derived from the interview. This discussion was undertaken in the
light of the concepts or the ideas which were highlighted in the literature review section of
the study through the usage of the past literature. This chapter is followed by the last chapter
of the study, namely, “Conclusion and Recommendations”.

46FOREIGN DIRECT INVESTMENT AND TRADE
Chapter 6: CONCLUSION AND RECOMMENDATIONS
6.1 Conclusion
The above discussion indicates that the economic growth that the nation of India had
been able to attain in the present times is the result of a conglomeration of various factors the
effective utilization of which had helped the concerned nation to attain the desired level of
economic growth. For example, the entire study clearly reveals the fact the effective
utilization of the large workforce, technological resources, expansion of trade and commerce,
large number of foreign direct investments (FDIs) that the nation had received in the present
times and others have directly contributed towards the economic growth of the nation under
discussion here. In particular, mention needs to be made of the process of FDIs which had
substantially boosted or rejuvenated the different industries as well as the business enterprises
of the nation of India and thereby not only contributed towards the expansion of trade and
commerce in India but also led to the growth of the national economy of India as well.
The study also revealed the fact that there are various factors on which the FDIs that
the nation of India had received in the present times significantly depend. In particular,
mention needs to be made of the positive image of the nation of India in the international
business arena as a favorable business hub, the different governmental initiatives or policies
for the expansion of trade and commerce, the high potential shown by the Indian business
market over the years and others. More importantly, it is seen that the amelioration of all
these aspects or factors had made the nation of India as one of the most preferred locations of
the multinational corporations when it comes to making business investments. Needless to
say, this had directly contributed towards the recent economic growth attained by the nation
of India in a substantial manner. However, there is still scope or room for much improvement
and thus it becomes important for the Indian national government to take the help of adequate
measures for the purpose of accelerating the economic growth rate of the nation of India.
6.2 Linking with Objectives
Primary Objective: To analyze whether the economic growth of India has been affected
over the years by the dynamics in FDI and the trade sector of the country
The researcher in the sections 2.5 and 2.8 sections of the Literature Review found that
the economic growth of any nation is greatly dependent on the growth or the expansion of the

47FOREIGN DIRECT INVESTMENT AND TRADE
trade section of the concerned nation and also the number of foreign direct investments
(FDIs) that the nation gets from the multinational corporations. On the other hand, in the
Findings and the Discussion sections of the study found that the economic growth which the
nation of India had been able to attain in the recent times can be attributed to the expansion in
the trade and commerce of the concerned nation and also the large number of FDIs that the
nation had been able to get in the recent times. More importantly, it had been seen that the
expansion of trade and commerce and also the enhancement in the number of FDIs that the
nation is presently getting had increased the productivity of the business enterprises of the
concerned nation which in turn had positively affected the profitability earned by the existing
business enterprises of India. This is important from the perspective of the economic growth
of the nation of India since the economic growth of any nation is directly tied up with the
growth attained by the different business enterprises operating in the concerned nation.
Secondary Objectives:
I. To understand whether greater inflow of foreign direct investment is directly or
inversely related with the economic growth of the country
The section 2.8 of the Literature Review of the study clearly reveals the fact that the
economic growth attained by any nation is directly related to the inflow of the FDIs that the
concerned nation. For example, this section of the study explicitly reveals the fact that the
nations which get a higher number of FDIs are being able to attain a higher economic growth
and vice versa. More importantly, this aspect is being supported by the primary data which
had been collected for the completion of the study through the usage of the construct of
interview as well. Furthermore, the Discussion section of the study reveals the fact that the
economic growth attained by the nation of India can be ascribed to the numerous FDIs that
the concerned nation had been able to get in the recent times. In the light of these aspects, it
can be said that the greater inflow of foreign direct investments had directly or for that matter
positively affected the economic growth attained by the nation of India.
II. To analyze whether the expansion of international trade relations is directly or
inversely related with the economic prosperity of the country
The sections 2.3.1, 2.4, 2.5 and 2.7.1 of the Literature Review clearly indicate the fact
that the expansion of international trade relations of a nation is directly related to the level of
economic growth attained by the concerned nation. More importantly, the viewpoint even

48FOREIGN DIRECT INVESTMENT AND TRADE
finds support from the answers given by the Managers who participated in the interview
related to the question regarding the same topic in the particular context of the economic
growth attained by India in the recent times. This can be explained on the basis of the fact
that the expansion of trade or trade relations offers the opportunity to the business enterprises
to manufacture surplus amount of goods or services. This is important since the revenue or
the profitability earned by the business enterprises is directly regulated by their productivity
or the sale of the surplus goods or services manufactured by them. This directly influences
the economic growth attained by the nations. Thus, it can be said that the expansion of
international trade relations had positively affected the economic growth of the nation of
India.
III. To find out whether the economic growth (if any) due to inflow of FDI and trade
expansion percolated in developing all the sectors of the economy of the country
The literature review and also the findings and the discussion sections of the study
clearly reveal the fact that an important aspect of the expansion of trade and commerce within
the nation India and also the greater inflow of FDIs that the nation is presently getting had
percolated in developing all the sectors of the economy of the country. This is important from
the perspective of the overall growth or development attained by the different industries or
the business enterprises of the nation under discussion here. This can be explained on the
basis of the fact that the business activities or the operations of the business enterprises
related to one particular industry is greatly related to the ones related to the other industries.
In the light of these aspects, it can be said that the expansion of trade and commerce coupled
with the enhancement of the FDIs that India gets presently had effectively contributed
towards the economic growth of the economy of the nation by helping in the growth of the
diverse industries of the concerned nation.
6.3 Recommendations
The nation of India had been able to attain a substantial amount of economic growth
in the recent growth in the recent times yet at the same time it needs to be said that is
opportunity for further economic growth as well. This can be effectively done through the
usage of the below given measure-
 Creation of a positive image of the nation: The national government of India needs
to create an image of the concerned nation in the international business world as that
of a nation which greatly supports the business activities of the different business

49FOREIGN DIRECT INVESTMENT AND TRADE
enterprises operational within the same. This is important from the context of the
different FDIs or the business investments that the nation gets from the different
international business enterprises since the international business enterprises always
look for the nations for investment in which they would get the opportunity to conduct
their business in a congenial manner. As mentioned in the literature review section of
the study, greater inflow of FDIs enhances or accelerates the economic growth of a
nation and thus it is likely that the nation of India would be able to attain a higher
economic growth through the effective usage of this measure. More importantly, this
will also rejuvenate the different business corporations of the nation of India by way
of the investments made by the multinational corporations. This is likely to positively
affect or accelerate the economic growth rate of India.
 Formulation of adequate business policies or regulations: The business policies or
the regulations formulated by the national government of a nation not only regulates
the business activities of the business enterprises but also greatly determines the
degree of success attained by them as well. More importantly, it is seen that adequate
or congenial business regulations or policies greatly influences the revenue or the
profitability of the business enterprises which in turn determines the economic growth
attained by the nations. Thus, it can be said that the national government of India
through the formulation of adequate or congenial business policies or regulations
would be able to help the business enterprises to earn a higher amount of profitability
which in turn would help it to accelerate the pace of its economic growth.
 Expansion of trade and commerce: The Indian government through the expansion
of trade and commerce would be able to help the business enterprises to sell the
surplus goods or services that they manufacture and thus help them to earn a higher
amount of revenue which in turn is likely to positively affect its national economy.
This will help the business corporations to pay the required amount of subsidies, tariff
charges, tax money and others to the national government of India which will
contribute positively towards the economic growth of India. Thus, it is likely that
through the adequate usage of this measure the Indian government would be able to
accelerate the pace of its economic growth.

50FOREIGN DIRECT INVESTMENT AND TRADE
6.4 Future Scope
The major limitation of this study can be ascribed to the fact that because of
accessibility issues the researched was able to interview only eight Managers related to the
financial sector of India. Furthermore, because of resource constraint and time constraint the
researcher was not being able to conduct survey to collect responses from a large number of
employees related to the financial sector of India. These in turn had substantially narrowed
down the scope of the research or study under discussion here. Thus, in the future, the
researcher would try to substantially enhance the scope of the study or the research by
conducting interview with a larger number of Managers and also take the help of the tool of
survey to collect primary data from a larger number of employees related to the financial
sector of India. This in turn is likely to enhance the quality or the accuracy of the research in
a substantial manner and thereby render effectiveness to the same.

51FOREIGN DIRECT INVESTMENT AND TRADE
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APPENDIX: Interview Questions
1. Kindly specify the name of the corporation with which you are presently associated
with, your role and designation within the same
2. Do you think the growth of trade and commerce is an important factor which had
affected the economic growth of India?
3. Do you think the increasing number of foreign direct investment is an important
factor which had contributed towards the economic growth of India?
4. Do you think the trade policies and the business regulations of India had helped the
nation to attract a large number of Foreign Direct Investments in the recent years?
5. Do you think the growth potential shown by the Indian economy in the recent years is
an important factor which had helped it to attract a large number of FDIs?
6. In your view how will you see the negative effects of FDIs on the Indian economy?
7. What according to you are the important measures that the Indian government needs
to undertake so as to attract more FDIs?